Of the 17 funds to move sector 15 previously sat in the UK equity income sector, with the majority choosing to move having failed the yield test based on 12 months’ look back on December 2008.
Neptune income fund manager Robin Geffen is the big name player joining Invesco stalwart Neil Woodford in the new sector.
The new sector has funds which invest at least 80 per cent of their assets in UK equities, aim to have a historic yield on the distributable income in excess of 90 per cent of the yield of the FTSE all share index at the fund’s year end and which aim to produce a combination of both income and growth.
Other big names in the list include the HBOS UK equity income, Henderson UK growth and income and JPM UK strategic equity income fund. Multi-manager offerings from Credit Suisse and Fidelity also moved. All funds moving from the UK equity income sector have retained their track records.
T.Bailey fund manager Jason Britton says the IMA was right to get tough on funds but not to the extent it has with this new sector.
He says: “This new sector offers a home to funds with yields of as little as 90% of the yield of the FTSE All-Share. We’re in the middle of bear market where yield is going to become increasingly attractive to investors, but a large proportion of these funds claiming to be income-focused will be no such thing. That’s not fair to investors. Our belief has long been that funds that consistently missed the UK equity income sector yield targets weren’t really trying, so moving into an income and growth sector where they can claim to have an income focus, but actually deliver less than the average yield of the FTSE All-Share will make little difference to the strategy of these funds – it will be business as usual.”
Funds in the UK equity income and growth sector:
Capita CF JM Finn UK portfolio fund
Capita Trojan income Fund
Credit Suisse multi-manager UK income portfolio
Fidelity MultiManager equity income portfolio
HBOS UK equity income fund
Henderson global care UK income fund
Henderson UK growth and income fund
ISFL Lawrence House UK equity
Invesco Perpetual high income fund
Invesco Perpetual income and growth fund
Invesco Perpetual income fund
Invesco Perpetual UK strategic income fund
JPM UK strategic income fund
Legg Mason UK income fund
Neptune income fund
Rathbone income and growth fund
St. James’s Place UK high income trust